CBRE Hotels Director, Hayley Manvell, and Associate Director, Research, Ally McDade, share their real estate outlook for the Northern Territory, South Australia and Western Australia markets.
The Northern Territory has emerged as one of Australia’s leading growth markets. Following an influx of new high-quality room supply in Darwin and a boom in domestic leisure travel, performance KPI’s in the region are now significantly above pre-COVID levels. Darwin recorded 44% RevPAR growth to AUAU$137, on a rolling 12-month period through to September 2022, reflecting an ADR of AUAU$219 (+34%) and occupancy of 63% (+7%). With the region acting as a gateway to major tourist destinations, and as the international tourism market recovers, CBRE expects the Darwin hotel market to continue its strong performance into 2023.
In response to a strong events calendar and significant incentives and conferencing at the Adelaide Convention Centre, Adelaide has recorded a boost to visitation underpinned by both leisure and corporate demand. The region’s strong appeal led to a 17% uplift in hotel occupancy on a rolling 12-month period through to September 2022. RevPAR growth also outperformed, rising 41% to AUAU$120. As a slew of new high-quality supply has entered the market, ADR rates are now well above pre-COVID levels, up 21% to AUAU$181. These performance indicators are expected to remain strong as Adelaide’s supply pipeline will soften throughout 2023 with a limited ~660 rooms under construction. Driven by strong market conditions and the tightly held nature of the Adelaide hotel market, investment appetite in the region is robust.
The recovery of the WA hotel market has been quicker than anticipated. Both leisure and corporate travel has improved with Perth RevPar now outpacing pre-Covid levels and expectations this will continue into 2023. Perth recorded a 29% RevPAR growth rate to AU$122 on a rolling 12-month period through to September 2022, reflecting an ADR of AU$193 (+14%) and occupancy of 63% (+14%). Perth is well positioned to meet this demand with recent new high quality room supply totalling 791 keys.
A further 1,072 rooms are currently under construction or have development approval. These include Elizabeth Quay, Courtyard by Marriott, Ausotel Kings Park, and the Dorsett Hotel. Sales have been limited, with the Peppers King Square in Perth recently transacting via CBRE for AUAU$26 million to Singapore-based High Street Holdings. New entrants are looking to expand their portfolios outside of the major markets and believe the hotel sector offers an inflationary and market hedge. Mid-market hotel assets priced between AU$20m and AU$50m are in high demand. CBRE currently has two hotel assets under contract with deals expected to complete in Q1 2023, with strong enquiries being fielded for the Holiday Inn Perth.